In its press release, the regulator emphasized that its goals remain unchanged – maximum employment and inflation at 2% over the long term. To support these objectives, the rate was reduced by a quarter of a percentage point. The Fed will continue to reduce its holdings of Treasury securities and agency mortgage-backed securities.
Federal Reserve Chair Jerome Powell said at a press conference that inflation acceleration is mainly driven by rising goods prices and the impact of new tariffs, which will continue into 2026.
According to him, the 25 basis point cut will not have a significant effect on the economy, and there was no broad agreement within the committee for a sharper 50 basis point cut.
Powell noted that the labor market can no longer be described as stable, even though unemployment remains low. He added that inflation risks have decreased compared to April, and the likelihood of prolonged price growth has fallen.
The rate cut was supported by Powell and ten other committee members. Stephen Miran voted against, proposing a 50 basis point cut instead.
Market Reaction And Forecasts
According to a Reuters poll conducted from September 8 to 11, 105 out of 107 economists expected this exact outcome.
They noted that in the first half of the year, economic growth slowed, employment fell, and unemployment rose slightly, although it remains low. At the same time, inflation accelerated and continues to stay above the target level. The Federal Open Market Committee (FOMC) highlighted growing risks for employment and uncertainty in forecasts.
Analysts now predict not just one but two or more cuts before the end of the year. Powell stressed that future steps will depend on incoming data and the balance of risks.
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